Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 (42 of 2011)

Schedule 1  

Part 1   Remuneration

8   At the end of Chapter 2D

Add:

Part 2D.7 - Ban on hedging remuneration of key management personnel

206J No hedging of remuneration of key management personnel

(1) A member of the key management personnel for a company that is a disclosing entity, or a closely related party of such a member, must not enter into an arrangement (with anyone) if the arrangement would have the effect of limiting the exposure of the member to risk relating to an element of the member’s remuneration that:

(a) has not vested in the member; or

(b) has vested in the member but remains subject to a holding lock.

(2) Without limiting paragraph (1)(a), remuneration that is not payable to a member until a particular day is, until that day, remuneration that has not vested in the member.

(3) In determining whether an arrangement has the effect described in subsection (1) in relation to an element of remuneration described in that subsection, regard is to be had to the regulations (if any) made for the purposes of this subsection.

(4) A member of the key management personnel for a company who contravenes subsection (1) commits an offence.

(5) An offence against subsection (4) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(6) A person commits an offence if:

(a) the person is a member of the key management personnel for a company; and

(b) a closely related party of the member contravenes subsection (1) in relation to the member; and

(c) the person is reckless as to the contravention.

(7) A closely related party of a member of the key management personnel for a company commits an offence if the party intentionally contravenes subsection (1) in relation to the member.

(8) ASIC may by writing declare that subsection (1) does not apply to a specified arrangement, but may do so only if ASIC is satisfied that the operation of that subsection would be unreasonable in the circumstances. The declaration has effect accordingly. The declaration is not a legislative instrument.

Note: A defendant bears an evidential burden in relation to the matter in subsection (8): see subsection 13.3(3) of the Criminal Code.

Part 2D.8 - Remuneration recommendations in relation to key management personnel for disclosing entities

206K Board to approve remuneration consultants

(1) This section applies to a contract (a remuneration consultancy contract ):

(a) that is for services that include making a remuneration recommendation in relation to one or more members of the key management personnel for a company that is a disclosing entity; and

(b) that is between the company and a person (the proposed consultant ) who, by making the recommendation under the contract, will be a remuneration consultant.

(2) Before a company enters into a remuneration consultancy contract, the proposed consultant must be approved by:

(a) the directors of the company; or

(b) the members of a committee (the remuneration committee ) that:

(i) is a committee of the board of directors of the company; and

(ii) has functions relating to the remuneration of key management personnel for the company.

(3) A contravention of subsection (2):

(a) is not an offence except as provided by subsection (4); and

(b) does not affect the validity of the contract.

(4) The company commits an offence if, at the time the company enters into the contract, the proposed consultant has not been approved in accordance with subsection (2).

(5) An offence against subsection (4) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

206L Remuneration recommendation by remuneration consultants

(1) This section applies to a remuneration recommendation made by a remuneration consultant in relation to one or more members of the key management personnel for a company that is a disclosing entity.

(2) The remuneration consultant must provide the recommendation directly to either or both of the following:

(a) the directors of the company;

(b) the members of the remuneration committee (if any).

(3) However, the remuneration consultant must not provide the recommendation to a person who is an executive director of the company unless all the directors of the company are executive directors of the company.

(4) The remuneration consultant must not provide the recommendation to a person who is neither a director of the company nor a member of the remuneration committee.

(5) If the remuneration consultant contravenes subsection (2) the remuneration consultant is not guilty of an offence. This does not prevent the remuneration consultant from being guilty of an offence for contravening subsection (3) or (4).

Note: Subsection 1311(1) makes it an offence for the remuneration consultant to contravene subsection (3) or (4).

(6) This section does not prevent someone other than the remuneration consultant from providing the recommendation to a person who is neither a director of the company nor a member of the remuneration committee.

206M Declaration by remuneration consultant

(1) This section applies to a remuneration consultant who makes a remuneration recommendation in relation to one or more members of the key management personnel for a company that is a disclosing entity.

(2) The remuneration consultant must include with the recommendation a declaration about whether the consultant’s recommendation is made free from undue influence by the member or members of the key management personnel to whom the recommendation relates.

Note: Failure to comply with this subsection is an offence: see subsection 1311(1).

(3) An offence based on subsection (2) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.